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The system is easiest to understand when compared to gold. This is because many of gold’s positive characteristics also apply to Bitcoin.

It is considered scarce, valuable, a hedge against inflation, and even an asset that appreciates in value. Gold has therefore been used throughout history as a reserve backing for fiat currency.

However, gold is not trustless, because one must trust the banks that the claimed amounts of gold are actually held in their vaults. Humanity will never be able to know the true amount of gold reserves. The price of this precious metal is therefore open to question.

Neither gold nor Bitcoin are industrial commodities. Moreover, Bitcoin exists in digital form—but with a range of advantages and other positive characteristics.

Bitcoin is therefore not a currency, but true base money. Thanks to its decentralized protocol, it operates without the need for any trusted third party. It is therefore counterfeit-proof, portable, and, due to its strictly limited supply, not subject to inflation. The network operates according to free-market principles, has no central authority, is free from moralizing, and can be used by any entity.